As companies work to navigate these uncertain times, it is vital that organizations don’t let diversity efforts fall in priority.
The decline in diversity, equity and inclusion (DEI) initiatives isn’t hypothetical — several studies have found a decrease in DEI positions and programs. According to Bloomberg, listings for DEI roles were down 19% last year, a larger decline than other human resources jobs.
Concerns have mounted — considering the more than 215,000 layoffs as of early July 2023 — that the “last in, first out” approach will disproportionately impact diverse employees who were hired during the rush of DEI initiatives in the past two years.
Diversity efforts fatigue
Adding to this issue is that fatigue with DEI initiatives is very real. A Gartner report found that 42% of employees believe their organization’s DEI efforts are divisive. A recession is an opportunity for companies to focus on key initiatives that really move the needle on diversity. Companies around the country are rethinking their DEI strategies, prompted as much by employee resistance as by a general lack of results.
In fact, an HBR study found that the three most popular DEI interventions — mandatory training, job tests, and grievance systems — make companies less diverse, leading to a measurable decrease in diversity in management across gender and race.
Far too often, these programs focus on negative incentives, messaging around what not to do and the threats posed to the organization as a result of poor practices. What’s more, these interventions largely place the burden of inclusivity and diversity on middle-level management, rather than the organization as a whole.
Pushback on DEI
However, pushback on DEI doesn’t mean it’s any less important to employees. According to Lean In & McKinsey’s annual Women in the Workplace of 2022, one in five female leaders have left a job in the past two years because of a company’s lack of commitment to DEI.
Seeing a lack of diversity in leadership tells current and prospective employees that a company isn’t a place where someone like themselves can thrive. These two issues might seem contradictory, a pushback on DEI and candidate’s desire to work at diverse, inclusive companies.
However, they boil down to the same thing. Much of the pushback on DEI is that current programs can feel isolating, they place blame on employees and they don’t improve the working conditions or career prospects of diverse employees. They provide a lot of lip-service to DEI issues without meaningful impact. Employees want to feel that they belong and managers want to feel that they’re supporting and helping an organization.
The impending recession may have taken some focus off of DEI, but you don’t want to let initiatives fall by the wayside.
Focus for now
Here’s what to focus on now:
- Act now. Layoffs often disproportionately impact the most recent hires of an organization, as many companies follow a “last in, first out” approach. This could mean that in the next year there will be more available diverse talent. If your organization is hiring right now, don’t let this opportunity pass by.
- Be consistent. True, lasting diversity in an organization is a cumulative effort. It takes years of consistent, intentional effort to really make a change. Success in DEI does not come down to one effort or tool, but rather the aggregate impact of many different sourcing, hiring, interviewing, and retention strategies. DEI is a marathon, not a sprint. Don’t let the progress you’ve made be lost just because DEI has fallen out of popular conversation.
- Invest in what matters. A recession is often a time for companies to decide what’s important to them. To tighten the purse strings and only invest in what really matters. What you do during these times says a lot about your company and your values. If your organization stays clear on your commitment to inclusion, you will likely reap the benefits for years to come.
- Aim to retain. Inclusion is key for retention. Plenty of studies have come to the same conclusion; inclusive companies see less turnover. Keeping DEI a priority now will save your organization from the future added burden of replacing employees who leave.
- Commit to it. It may seem that DEI is falling out of the public conversation. A recent WSJ article reported that executives at U.S-listed companies mentioned the terms “diversity and inclusion” and “environmental, social, and governance” 31% less on earnings calls this year compared to last year. However, there is no indication that companies are pulling back on these initiatives or reducing effort or budget spent on DEI. They may be talking about them less, but DEI initiatives are still happening. So while the conversation seems to have shifted, commitments have not. Don’t stop your DEI efforts, because your competitors have not.
- Get creative. Don’t let DEI slip because it still matters. It matters for company performance and for employee satisfaction. A Deloitte survey found that organizations with inclusive cultures are “twice as likely to meet or exceed financial targets, three times as likely to be high-performing, six times as likely to be innovative and agile, and eight times more likely to achieve better business outcomes.” In a recession, your organization will need all the innovation and creativity that it can get.
Lastly, DEI efforts are important because employees and job seekers still prioritize diverse and inclusive companies. A 2019 McKinsey study found that 39% of applicants (including women, ethnic and racial minorities, and members of the LGBTQIA+ community) decided not to pursue a job opportunity because they perceived the organization as non-inclusive.
Diversity matters, now more than ever. You can take this recession as an opening not to halt diversity initiatives, but to focus on the ones that matter.